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Commissioner’s position was reasonable by examining applicable
facts and circumstances at the time he asserted his position in
the answer and during the trial. See Maggie Management Co. v.
Commissioner, 108 T.C. 430, 443 (1997).
Petitioners contend that the decision of this Court in
Mid-Del I, which held that respondent’s determination was
arbitrary, capricious, or without sound basis in fact or law,
necessarily leads to a conclusion that respondent’s position at
trial was unreasonable. In support of this assertion,
petitioners rely on Mauerman v. Commissioner, T.C. Memo. 1995-237
(Mauerman II), which held that a failure by the Commissioner to
waive an addition to tax was unreasonable. Respondent argues
that Mauerman II does not stand for the proposition for which it
is cited by petitioners and that respondent’s litigating position
was reasonable.
In Mauerman v. Commissioner, T.C. Memo. 1993-23, revd. 22
F.3d 1001 (10th Cir. 1994) (Mauerman I), the issue that was
litigated was whether the taxpayer should be subject to additions
to tax under section 6661(a). At trial, the taxpayer had the
burden of proving that the Commissioner’s imposition of the
additions to tax was arbitrary, capricious, or without sound
basis in fact or law. This Court upheld the additions to tax and
decided that the Commissioner had not abused his discretion. The
Court of Appeals for the Tenth Circuit reversed the decision of
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